The Kainuu Regional Experiment

SJPA The Kainuu regional experiment: deliberate and 19(4) unintended effects of scaling local government tasks to the regional level Arto Haveri, Jenni Airaksinen and Anni Jäntti* Abstract Arto Haveri This article examines the deliberate and unintended effects of the Kainuu Regional Exper- School of Management, iment, a regional reform where some important local government tasks were rescaled to University of Tampere the regional level. The analysis is based on the empirical results of a long-running evalua- [email protected] tion study. In Kainuu, the new regional government was successful in securing the quality Jenni Airaksinen and availability of welfare services, but in the task of regional development ‒ creating School of Management, new growth and development ‒ its role has been practically secondary, and in some cases University of Tampere the new regional government has been marginalised by the tensions built into it during the rescaling process. The Kainuu experiment exemplifies a case of rescaling where some Anni Jäntti (political) tensions between two perspectives/factors, service and development, were School of Management, rescaled together with local government functions, reflecting the reformer’s problem that University of Tampere it is extremely difficult to achieve many different outcomes with one governance expedi- ent. Altering the scale of governance has consequences for political decision-making, power structures, institutions, and citizens. Rescaling through a restructuring of hierarchy may produce different outcomes in different activities, and the coercive character of the tool can both create unexpected tensions and undermine network activity. Introduction Keywords: The rescaling of governmental power from the state and local levels to the re- Regional Government Local Government gional level has often been presented as an answer to the challenges of both Public Sector Reform competitiveness and increasing the efficiency of public service production Intergovernmental Relations Regional Development (Jones and Macleod, 1999; Keating and Loughlin, 1997; Herrschel and Tallberg 2011, 9). Economies of scale, economies of scope, joint planning and joint policy coordination are believed to enhance the quality and efficacy of public policies (for a review of the research findings on scale economies in local government, see Byrnes and Dollery 2002 or Boyne 1995). The particular strength of the regional level is that it is usually large enough to overcome many production-related obstacles in public services while also working relatively close to citizens (Lidström 2011, 21). But do different rescaling tools always produce similar results? In Finland, rescaling took an interesting form in a special self-government experiment in the Kainuu region. The experiment was launched in 2004 because of the weak economic situation of the region’s municipalities, the rising unemployment figures and the very challenging demographic trend. The Kainuu experiment could be defined as rescaling (Brenner, 1999) or experimental regionalism (Fürst, 2006) because it was a state-induced reform intended to test different aspects of re- Scandinavian Journal of gional self-government by transferring decision-making power upwards from Public Administration 19(4): 29-47 © Arto Haveri, Jenni *Arto Haveri is a professor of Local Government Studies. School of Management, University of Airaksinen, Anni Jäntti and Tampere, Finland. School of Public Administra- Jenni Airaksinen is a D.Sc. (Admin.), University Lecturer, School of Management, University of tion 2015 Tampere, Finland. ISSN: 2001-7405 Anni Jäntti, is a M.Sc. (Admin.), University Teacher. School of Management, University of Tampe- e-ISSN: 2001-7413 re, Finland. Arto Haveri, Jenni Airaksinen and Anni Jäntti municipalities to the regional level and downwards from the central government to a regional council elected directly by the residents of the region. What makes the Kainuu case particularly interesting is the nature of rescaling, which differs from mainstream regionalism such as the actor networks based new regionalism (Keating 1998; MacLeod 2001) and local government amalgamation reforms. In this article, we explore the rescaling of governance by studying the Kainuu experiment, especially by focusing on the performance of democratically elected regional council as a rescaling tool. We ask the following research ques- tions: “What are the consequences of a regional reform, where important local government tasks are rescaled to the regional level using an elected regional council as the tool of reforming?” and “What do the outcomes reveal about the strengths and weaknesses of the hierarchy approach in an attempt to build a region?” With regard to rescaling tools, we distinguish hierarchical rescaling from the network approach, and define the different approaches on the basis of the amount of obligatory and voluntary elements included in them. We make two contributions to the debate on rescaling and regionalisation. First, and quite pragmatically, we evaluate the deliberate and unintended outcomes of rescaling and especially consequences on health care services and regional development policies, which earlier had been the responsibility of the municipalities. Here, the results of our evaluation study clearly show both the advantages and the pitfalls of rescaling. The impacts of the Kainuu experiment are twofold. In the case of services, regional decision-making brought significant results in securing the quality and availability of services while at the same time contributing to an almost 50% decrease in the rise of the municipalities’ operat- ing expenses for social and health care services. The results for regional development, however, were not as good. The democratically elected regional body was unable to find new and innovative ways of development and could not sup- port regional economic growth. Second, and more importantly, we focus on the organisational dimensions of rescaling and the contingent character of rescaling tools. Two tensions built into the Kainuu experiment – namely, the tension between services and regional development and the tension caused by citizen disaffection – make it possible to analyse the theoretical notions concerning the rescaling tools; specifically, to investigate the strengths and the weaknesses of hierarchies. We argue that in addition to the deliberate outcomes, rescaling reforms also have consequences for political power structures and institutions. Hierarchy including the exercise of authority was necessary to implement structural changes that contributed to the collection of resources and the improvement of service performance. But the exercise of authority, coercive use of power, does not necessarily produce inno- vations and economic growth. The data presented in this article are derived from the last phase of a long- running empirical study which started in 2004, when the authors of this article were commissioned to conduct an independent evaluation of the experiment. The evaluation ended with the final report in spring 2010. The final phase of the 30 The Kainuu Regional Experiment evaluation focused on the effects of the self-government experiment, especially in relation to services and regional development. Methodologically, the evaluation research dealt with a complex policy system, and thus the evaluation research was seen as calling for triangulation in order to make decisions and judgements about the significance and weight of various sources and forms of evidence. The main sources were a citizen survey (997 respondents), interviews of politicians and public officials (40), statistics, documents, study reports and GIS (geographic information system) data. A de- tailed description of the data, the study process, the methods and the materials is given in the report of Jäntti et al. (2010). Because all of the empirical claims made in this article are based on the data presented in this evaluation report, references from the evaluation report are not repeated in the text if there is no particular reason to do so. From networks to hierarchies Upward rescaling of public governance means that policies and services are coordinated for a larger geographical area than previously. In the Finnish political reality, intermunicipal cooperation has traditionally been the tool applied in activity of this kind (Hulst et al., 2009). Indeed, intermunicipal cooperation is well developed and takes place in many areas of municipal operations, such as health care, local economic development, education and culture. Because there is no regional self-government in Finland, regional activities have also been coordinated through intermunicipal cooperation. As a coordination mechanism, intermunicipal cooperation is based on the network approach, as it relies on inter- dependencies and the voluntary cooperation of equal actors. The establishment of a regional government that is financially independent of the municipalities and headed by a council that is elected directly is a question of hierarchical governance, i.e. rescaling through hierarchy. Matters that had previously been decided by municipalities jointly are now decided by the regional council. Thus, it can be deduced that the Kainuu Regional Experiment represented a transition from networks to hierarchies, and from governance to government. The idea that markets, hierarchies and networks form the basic alternative strategies for the coordination of social action is a central

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